America's Need for a Stronger Partnership with Azerbaijan

Introduction

In ‘The Grand Chessboard’, Zbigniew Brzezinski's 1998 book examining American geostrategic imperatives around the world, the former U.S. National Security Adviser described Azerbaijan as one of the world's "geopolitical pivots" and a key to U.S. security interests. Brzezinski, who also served as an emissary to Azerbaijan under the Clinton administration, believed that Eurasia is a center of global power. Azerbaijan, as a resource-rich country with deep ties to the several international powers on its borders, is uniquely situated to play a pivotal role in regional affairs. Fifteen years later, Brzezinski's description -- along with Azerbaijan's strategic value to the United States -- still stands.

Azerbaijan occupies a valuable geographic position as the largest Caucasus state located at the crossroads of Western Asia and Eastern Europe. The majority-Muslim but secular country shares borders with three geopolitical heavyweights highly relevant to U.S. foreign policy: Russia, Iran and Turkey (through Nakhchivan AR, the landlocked Azerbaijani exclave sandwiched between Iran, Armenia and Turkey). This, combined with its abundant hydrocarbon reserves, has made Azerbaijan increasingly geopolitically significant since it gained independence in 1991 after the collapse of the Soviet Union.

Indeed, the broader Caspian Basin -- a region at the center of what has been called the "strategic energy ellipse" between Russia and the Persian Gulf -- remains an important alternative source of oil and natural gas for European and Asian markets. Azerbaijan itself possesses an estimated 7 billion barrels of oil and 2.5 trillion cubic meters of proven natural gas (with 2P reserves to 4 tcm increase in offshore prospects).

U.S. policy on the Caspian Basin has primarily involved strengthening the political and energy independence of regional countries, weakening Russian influence, expanding U.S. economic opportunities, and facilitating the export of Caspian oil and natural gas to Western markets (in part by building pipelines to Europe that bypass Russia and Iran). Washington has several security interests in the region as well, including deterring threats from Iran and Russia and limiting Islamic extremism.

Azerbaijan has proved a willing partner in each of these areas. Baku has given U.S. energy companies wide access to Azerbaijani energy reserves and actively supported U.S. military campaigns in the Middle East. Moreover, Azerbaijan's historically strained relations with two U.S. adversaries -- Russia and Iran -- and strong ties with two U.S. allies -- Israel and Turkey -- make the country an ideal partner on a range of geopolitical issues. Thus, Washington should seek to become even more involved in Azerbaijan and more concerned with Azerbaijani key issues, especially helping to resolve tensions with Armenia over Nagorno-Karabakh and deterring Iranian aggression in the Caspian Sea.  

Russia: Pipeline Politics and the Armenian Issue

The history of Russian-Azerbaijani relations has been characterized largely by change. Azerbaijan was incorporated into the Russian Empire in 1813, and the country was annexed by the Soviet Union in 1920. After the collapse of the Soviet Union, Azerbaijani-Russian relations entered a new stage. During the first years of independence under former Azerbaijani President Abulfaz Elchibey, Baku's relationship with Moscow was relatively cold, with Elchibey promoting secular, pan-Turkic, pro-Western, pan-Azeri, anti-Russian and anti-Iranian policies. However, after a new government took power in Baku in 1993, new President Heydar Aliyev looked to balance relations with the West with those of Russia. Indeed, a key part of Azerbaijani strategy has generally been to balance its ties with between regional and non-regional powers.

However, Russian-Azerbaijani relations have often been strained. Azerbaijan has been criticized by the Kremlin for cooperation closely with the West and seeking to bypass Russia in exporting Azerbaijani energy resources to Western markets. Russia's support of Armenia in the conflict over Nagorno-Karabakh region has further complicated bilateral relations. When Azerbaijan signed an agreement to develop Caspian oil reserves with a Western consortium led by British Petroleum, Moscow tried to impede production. Azerbaijan managed to mollify the Kremlin, in part by offering a 10 percent stake in the agreement to Russia's LUKoil. But the primary reasons why Moscow could not block the deal was the weakness of the Boris Yeltsin's administration and the strong support from the Clinton administration for Azerbaijan.

The proposed Trans-Caspian Gas Pipeline, which would run under the Caspian Sea between Turkmenistan to Baku before connecting with an existing pipeline to Turkey, has generated similar resistance from the Kremlin. The Trans-Caspian project would be important part of future EU-backed projects such as Nabucco-West Pipeline or the Trans-Adriatic Pipeline, both of which would carry the Caspian natural gas to European markets, thus decreasing Europe's dependence on Russian natural gas. Moscow has been able to slow the process by claiming that the pipeline would cause environmental problems and thus should receive consent from all the countries lining the Caspian coast. Russian state-owned energy company Gazprom and other members of the consortium behind South Stream -- the pipeline currently under construction that will deliver Russian natural gas to Southern Europe and the Central European Gas Hub in Austria -- considers Nabucco-West a possible threat to their interests in the European energy markets. Nabucco-West would supply gas to eastern Balkan and Central European consumers that are currently dependent on Russian supplies now, so the project would end Gazprom's monopoly in those regions. Thus, Gazprom has been attempting to use its leverage gained from South Stream to deter the competing projects.

Russia's military and economic support of Armenia, which occupied roughly 20 percent of Azerbaijani territory during the Nagorno-Karabakh War in the late 1980s and early 1990s, is another source of Azerbaijani distrust of the Kremlin. As co-chair of the OSCE Minsk Group, Moscow has not shown an impartial interest in resolving the Nagorno-Karabakh conflict and instead actually supplied Armenia with weapons and military training. In 2010, Armenia and Russia signed a deal extending Russia's military presence in Armenia in exchange for security guarantees, and bilateral relations between Moscow and Yerevan have tightened.

Arguing that Russia's Gabala Radar Station has harmed the environment and tourism in the region, Baku attempted to increase rent on the station in 2012 from $7 million to $300 million annually, but the parties could not agree on the terms. The radar station, which was built by the Soviets in 1985 and had been leased by Russia since 2002, was Russia's only remaining tangible security presence in Azerbaijan.

Azerbaijan still wants to cooperate with Russia in order to maintain stability in the strategic region. If Russia took more positive, earnest steps to resolve the Nagorno-Karabakh conflict, then distrust of the Kremlin in Azerbaijani society would be largely eliminated.  

Iran: Deep Ties, Tensions in the Caspian Sea

Since Azerbaijani independence, Baku-Tehran relations have been unstable due to the constantly changing priorities of each state. Azerbaijan shares historical, cultural and religious ties with its southern neighbor. Around 95 percent of Azerbaijan's population is Muslim and roughly 85 percent of them are Shia. But despite these ties, bilateral relations between the two countries have been strained by certain key factors: First, an estimated 20 million to 30 million Azeris live in Iran, and Tehran perceives their presence as a threat to the regime. Second, Azerbaijan's close relationship with the West -- especially with the United States and Israel, which Iran considers being an "Enemy of Islam" and threatens periodically to "wipe off the map" -- has been a constant source for criticism by Tehran. And finally, Iran opposes the secular nature of the predominantly Shiite country, where Azerbaijanis have great freedom of religion.

Historically, Iran's clerical regime has been keen to interfere in Azerbaijan's internal affairs. In May 2012, for example, Iran recalled its ambassador from Baku after accusing Azerbaijan of planning to hold a gay pride parade during an upcoming international music completion. Another irritation for Tehran was Azerbaijan's military cooperation with Israel, including the $1.6 billion purchase of Israeli weapon systems. Tehran considers weapon deal against its security even though Baku has never intended to use its military capabilities against Iran. Moreover, Iran cooperated closely with Armenia in its occupation of Azerbaijani territory during the Nagorno-Karabakh War, as a result which more than one million Muslims lost their homes and became refugees. Iran and Armenia still maintain close economic, energy and security ties.

Another source of contention between Baku and Tehran is the Caspian Sea -- or, more specifically, militarization and maritime delimitation in the sea. Iran insists that each state along the Caspian should control 20 percent of the sea -- a system that would benefit Iran since it has a smaller coastline than other coastal countries. Tehran has also been building up a military force in the sea, including the Jamaran-2, a major warship that was launched in March 2013. Iranian military ambitions in the Caspian Sea are not only motivated by issues with Azerbaijan, but also by regional stability and energy projects. As a result, the Caspian Sea is at risk of becoming highly militarized. This has made progress difficult on the Trans-Caspian project, which indeed has been the goal of regional powers that want to keep Central Asian natural gas flows to the West from bypassing Russia and Iran. Currently, only Azerbaijan exports global energy markets in a manner that bypasses those regional players.

Turkey: Mutual Interests and a Strategic Partnership

Turkey lacks the involvement of Russia and Iran in Caspian Basin affairs. But in a geopolitical context, Turkey plays an important role for Azerbaijani and U.S. interests in the region. The modern relationship between Turkey and Azerbaijan is based on national leader Heydar Aliyev's famous motto "one nation, two states." Indeed, Turkey was the first state that recognized Azerbaijan's independence, and the two countries are connected by deep cultural ties -- Azeris and Turks speak nearly the same language, for example. Moreover, during the Nagorno-Karabakh War, Ankara provided significant economic, military, political and humanitarian assistance to Azerbaijan. Turkey's support and the cultural ties contributed to Azerbaijan's decision to pursue the Turkish model of development, based on democratic institutions and integration with the Euro-Atlantic community. Ankara and Baku also cooperate closely in several different areas, including economic, political, cultural, military and energy ties. In 1994, for example, when Azerbaijan signed the oil contract known as the ‘Contract of the Century’ with major oil companies headed by BP, Turkish State Oil Company received a 1.75 percent stake. This launched a new era of energy cooperation between Azerbaijan and Turkey.

Beginning in 1997, Azerbaijan exported nearly all its oil via existing pipeline running from Baku to the Russian Black Sea port city of Novorossiysk pipeline, but this route became politically and economically unviable for the Azerbaijani government. Azerbaijan's growth as an oil exporter created the need for new and more powerful pipeline to carry the country's resources to global markets without depending on Russia. Azerbaijan diversified its energy transit options by partnering with Turkey and Georgia to build an oil pipeline connecting Baku, Tbilisi and the Turkish port city of Ceyhan, bypassing both Russia and Iran. Tehran and Moscow each dismissed the project as a dream, arguing that the pipeline would not be economically viable. But thanks in part to U.S. support, the pipeline, featuring a capacity of some 1 million barrels of oil per day and costing more than $3 billion, started operation on May 10, 2005.

Dependence on Russia has always been an Achilles' heel for energy exporting countries in the region. Thus, the Baku–Tbilisi–Ceyhan (BTC) oil pipeline was more than just an economic project, since it stimulated additional economic, political and security cooperation with Turkey, as well as tangible integration with Europe. The project opened a new era in regional energy cooperation and led to other projects, including the parallel Baku-Tbilisi-Erzurum natural gas pipeline, which has the capacity to pump as much as 20 billion cubic meters of natural gas each year, and the planned Trans-Anatolian natural gas pipeline (TANAP), which will have an initial capacity of 16 bcm per year (possibly increased to 23 bcm by 2023 and 31 bcm by 2026). Construction on the latter pipeline, which will carry Azerbaijani natural gas produced at Sah Deniz phase II and other fields (possibly including some in neighboring countries) via Turkey to European markets, is expected to begin in 2014.

Beyond energy issues, Baku and Ankara have also become key partners in security affairs, Ankara consistently providing political and military support to Azerbaijan. Perhaps the best example of this was Ankara's open support for Baku during the 2001 crisis between Iran and Azerbaijan in the Caspian Sea. Iran attacked Azerbaijani vessels, and two Iranian fighter jets later violated Azerbaijani air space in a demonstration of Tehran's military power. After the incident, Turkish military leaders made several speeches in support of Azerbaijan and sent several fighter jets to participate in an annual military parade in Baku.

Baku has also received support from Ankara in countering Armenian and Russian cooperation, which could threaten Azerbaijani national interests. Azerbaijan and Turkey signed a military pact in August 2010 -- the Agreement on Strategic Partnership and Mutual Support -- stipulating that the two countries would support each other "using all possibilities" if either country is attacked. The agreement was deemed necessary in response to increasing military cooperation between Moscow and Yerevan. 

However, in spite of all positive developments between Turkey and Azerbaijan, the Zurich protocols to normalize Turkish-Armenian relations and open borders between the two countries in October 2009 created political tensions between Ankara and Baku. The Azerbaijani government accused Turkey of selling it out diplomatically, claiming that opening the borders and lifting its blockade on Armenia would validate Armenia's occupation of 20 percent of the territory of Azerbaijan. Facing intense criticism in both Turkey and Azerbaijan, Ankara eventually backed down on the issue.

The United States: Regional Involvement, but Inconsistent Support

The United State is the only country that can project economic, political and military power nearly anywhere in the world. Since independence, Azerbaijan has become an important player in the Caspian region's tangled environment of conflicting interests and contradictions.

Early on after the collapse of the Soviets, U.S. interests in the region were primarily economic, focusing on gaining access to the large hydrocarbon resources of Caspian countries. Toward this end, U.S. priorities included developing the region's infrastructure, providing security, strengthening energy independence and facilitating the export of Caspian oil and natural gas to the world markets. The United States and Europe saw Caspian and Central Asian energy resources as an alternative to OPEC, which is considered in the West as a source of energy instability. Thus, Washington considers itself a main player in ensuring exports of Caspian energy resources to the Western markets and Azerbaijan as a strategic country due to its valuable geographic location and rich oil and natural gas reserves. In the aforementioned "Contract of the Century," Baku opened its energy resources to a Western consortium with heavy involvement from four U.S. energy companies: Amoco (17.01 percent), Unocal (11.2 percent), Pennzoil (9.82 percent) and McDermott International (2.45 percent). With roughly 40 percent of the stakes in the contract, U.S. energy companies were clearly a top priority for Azerbaijan, while Iran was excluded due to U.S. insistence.

In supporting Caspian energy projects, the United States has hoped to consolidate Western interests in the region and strengthen partnerships with Azerbaijan, Georgia and Turkey. These would help undermine Iranian power as well as Russia's ambitions to control energy resources by pulling regional states into its sphere of influence. The energy projects linking Azerbaijan with the West via Georgia and Turkey -- including the Baku-Tbilisi-Ceyhan and Baku-Tbilisi-Erzurum pipelines -- came online due to U.S. support.

However, U.S. policy toward the region changed after the 9/11 terrorist attacks, when Washington's military and foreign policy focus shifted to the Islamic world. Moreover, President Barack Obama's administration adopted its "reset policy" as a new approach toward Russia. Kremlin benefited from the softer U.S. position and began to become more assertive toward former Soviet states. Russia's war with Georgia in 2008 demonstrated Moscow's willingness to militarily punish regional states that oppose the Kremlin's interests.

As a secular Islamic state bordering Russia and Iran with a pro-Western orientation, Azerbaijan is indeed an ideal partner for the United States over security issues in the wider region. And Washington's partnership with Baku has played a key role for region-wide stability and security. Azerbaijan supported the U.S. military campaigns in Iraq and Afghanistan, sending troops to Afghanistan and -- perhaps even more important -- serving as a key component of the Northern Distribution Network. The country facilitated air, ground and naval transport for roughly 40 percent of International Security Assistance Force (ISAF) supplies bound for Afghanistan. Baku has anti-nuclear proliferation efforts and has proved to be a consistent ally of Israel. Azerbaijan has very close economic and security ties with Israel and supplies 40 percent of the country' oil needs.

Despite Azerbaijan's contributions to regional and international security and cooperation with Washington, the country is facing a serious security challenge at home. Ongoing tensions with Armenia over Nagorno-Karabakh are a tremendous threat not only to Azerbaijan, but also to regional security. But the United States, as one of the co-chairs of the OSCE Minsk Group, has not or simply does not want to play an active role in resolving the conflict. The Armenian occupation has continued for more than 20 years, but the United States, along with Russian and France, favors the status quo. Washington has essentially yielded to Moscow's priorities in conflict resolution. This strategy damages Washington's relationship with Baku and strengthens Moscow's control of the region.

Conclusion & Implications

There are essentially two layers of interests in Azerbaijan: The first are the interests of regional powers such as Russia, Iran and Turkey. The second is non-regional powers such as Europe and the United States. Regional powers tend to have myriad interests in the region, including Azerbaijan, whereas non-regional powers' are mainly interested in the Caspian Basin's energy resources and their own relations with regional powers.

When looking at Azerbaijan's relations with regional powers, it is important to understand the key challenges complicating bilateral relations in the region, as well as how each are shaped by the various interests of each country. Where Azerbaijan's relationships with its northern and southern neighbors have generally been strained, even if Baku downplays tensions, the country's relationship with Turkey is molded by a number of mutual interests.

U.S.-Azerbaijani relations are shaped primarily by U.S. interest in the Caspian Basin's energy resources, but also with U.S. relations with other regional powers, including Turkey, Iran, Russia, as well as with small regional states such as Armenia and Georgia. These broad geopolitical interests reflect the complexity of inter-state relations. While Washington sees Russia and Iran as its rivals, Turkey is its regional ally. The mediation role Washington played recently between Israel and Turkey, leading to Israeli Prime Minister Benjamin Netanyahu's apology to Ankara over the 2010 flotilla raid incident, was a result of Obama's strategy to reconcile its two allies in the region. 

Due to the change in government in Georgia, where anti-Russian President Mikheil Saakashvili became weaker and new Prime Minister Bidzina Ivanishvili has tried to consolidate influence over the Georgian-Russian relations, the geopolitical situation in the region became more complicated. If Georgia falls under Russian control, Azerbaijani-Turkish interests, and possibly U.S. interests, would be harmed. Ankara and Baku are supporting major energy and transport projects in the region, including the Trans-Anatolian natural gas pipeline. Considering the key role investments made by U.S. energy companies in Azerbaijan have played in bilateral relations, Washington should continue its active support for energy projects in the Southern Gas Corridor.  In addition, the two countries can also cooperate in exploration of Azerbaijani onshore oil fields. The ability of U.S. energy companies to provide advanced technology, investment and the application of modern oilfield practices would increase exploration efficiency and halt the decline in onshore oil production. Thus, Washington and Baku should increase economic ties, with U.S. companies increasing investments in non-oil sectors of the country.

The present situation shows that the United States does not want a crisis with Iran to escalate quite yet; Washington is not ready to enter a new conflict, and a military campaign in Iran would be bigger and more difficult than those in Iraq and Afghanistan. This is why despite Iran's hostile actions toward Azerbaijan, Baku could not enlist U.S. support. Washington could supply Azerbaijan with defensive systems such as border protection equipment, helicopter protection systems, simulators, command and control gear, and other defensive or border-security hardware and software. This sort of assistance would protect Azerbaijan's energy infrastructure and send a strong message to Iran to stop harassing and threatening its northern neighbor. But if Washington indeed wants a partnership with Azerbaijan and to bring security, stability and peace in the region, the United States should play more active role in the Nagorno-Karabakh peace talks and weaken the influence of the Armenian diaspora on U.S-Azerbaijani bilateral relations.

As argued by George Friedman, the founder of Texas-based global intelligence firm Stratfor: "The U.S. needs Turkey as a counterweight to Iran. The U.S. needs Georgia as a demonstration of its will. The U.S. needs Azerbaijan as its linchpin." Toward these ends, a Turkish-Georgian-Azerbaijani alliance would be advantageous for Washington to face any future challenges in the region.